The FI Guyshttps://www.thefiguys.com
A Journey To Financial Independence
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3232146162304How to Earn Extra Rewards and Savings on What You do Anywayhttps://www.thefiguys.com/how-to-earn-extra-rewards-and-savings-on-what-you-do-anyway/
https://www.thefiguys.com/how-to-earn-extra-rewards-and-savings-on-what-you-do-anyway/#commentsMon, 03 Sep 2018 17:02:34 +0000https://www.thefiguys.com/?p=475As people pursuing Financial Independence, it becomes more and more important to cut expenses. However, when you do spend money, you can ease the hurt…

]]>As people pursuing Financial Independence, it becomes more and more important to cut expenses. However, when you do spend money, you can ease the hurt on your wallet by making sure you are earning back points and rewards as well. In this post, we’ll list a few ways to get more from your spending and doing right now.

Grocery Discount Programs

Start simple and sign up at your grocery store’s rewards program. Do continue to shop around for groceries, but be sure to pick up the discounts on those purchases you need them.

Use Rewards Credit Cards

When you are not trying to earn a travel reward, it is still a good idea to put your spending on a credit card for both tracking and the rewards. You should be aiming to get at least 2% back on each purchase, so use at least a Citi Double Cash card or a Paypal Mastercard. If your credit score isn’t good enough for those, try going for cards with 1.5% back like the Capital One Quicksliver card or a standard 1% cash back if you have to. Remember, you need to also pay your credit cards in full each month and not get into credit card debt.

Cell Phone Discounts Just for Working

While you are still working, check and see if your company has a cell phone discount. All you have to do is put your work email address into the discount site (search online for the one for your carrier) and see if you can get one. If not, talk to your HR or IT departments and see if they can get you a discount (generally these cost the company nothing to sign up for). Here are a link to a few of the US carriers and their discount programs:

Get More Cashback/Points When You Shop Online

If you need to shop anywhere online (when you aren’t buying used items) or even book a hotel, don’t just head straight to the site. A lot of shopping web sites have partnerships with airlines and other cashback sites, so you could be earning a few extra points with your purchase. To see which ones, checkout Cashback Monitor, which aggregates all of the cash back portals and shows you which site will get you the best points/cash back. You then can visit the highest cashback shopping portal they link to and collect some cashback/points on what you are buying.

Before you buy anything online, look for more points through Cashback Monitor.

Use a search engine with Rewards

I shock most of my friends when I tell people I use Bing rather than Google. Why do I do that? Simply for Microsoft Rewards, which give you points for searches on your desktop and mobile devices. These points generally add up and can be used to get gift cards at Amazon and other retail outfits. If you are feeling a bit more altruistic, you can also use Goodsearch or Ecosia, they will pay money to charity when you use them to search.

A collection of gift cards on the Microsoft Rewards portal.

Restaurant Rewards

In case you are going out to eat, you can also earn cash back and points in a couple of different ways, mainly by adding your credit card to a rewards program. Ask Sebby did a great job breaking down the variety of apps that can be stacked to gain cash back at restaurants including Yelp Cash Back and restaurants on the Rewards Network, which powers most airline dining programs. Keep in mind, though, you can only tie one credit card with one Rewards Network program, so you can’t for example get American Airlines miles and Southwest miles on the same card. However, you can get Yelp Cash Back and the miles on the same card though.

Amazon Smile

Something slightly more altruistic is going through smile.amazon.com rather than regular Amazon.com. By going there, Amazon will pay a charity at no cost to you for every dollar you send on Amazon.com. This is also available in the UK as well.

More Travel Points

Here’s a couple of extra rewards you can get for travel:

Using Lyft for Delta and Jetblue miles: Lyft has partnerships with both Delta and Jetblue where you will gain points for rides you take on Lyft, though Jetblue only gives you points on airport rides to and from.

]]>Welcome to another post in my Financial Independence Update series! If you don’t know what the purpose of this series is, please read this first. This month, I am covering August of 2018.

I want to follow this particular format in these posts:

Main Goal(s). This will talk about my main financial goal(s) that I set out for the particular time period.

Ups and Downs. This will be a general reflection of what went well, what did not go well, and some improvements I am looking to make.

Financial Picture. This is not a net worth update. In this section, I will talk about how I deployed my cash in a way that improved my financial situation and why I did it the way that I did.

LookingForward. In this last section, I will talk about what I plan on doing going forward. This can include how I plan on deploying cash, any changes in my strategy, or any significant expected changes in my financial situation in general.

Main Goal(s)

Primary Goal: Net Worth Increase

The primary goal of this month was to increase my net worth as much as possible. This was accomplished in three different ways.

More frugality than usual.

Quarterly bonus from work.

Exercising more stock options from work.

I knew ahead of time that this month was going to be a higher income month. My Q2 work bonus is usually distributed in August. I wanted to be extra careful to not spend it. Therefore, I made an extra effort to be frugal. This month, I needed to buy a pair of pants and a couple of shirts. In an effort to stay frugal, I went over to Goodwill. There, I managed to buy a pair of pants, a button down shirt, and a polo for under $15 total.

The last major driver of my net worth increase was the exercising of my employee stock options (ISOs). Every month, I vest in a new round of ISOs from a previous startup buyout. This month, I decided to execute on the last few months worth of options.

Secondary Goal: Student Loan Paydown

This will probably remain a secondary goal for a while. The only update here is that I changed the auto-pay on this loan to be less than half of what it has been. I have a feeling that markets that might be falling in the future, and I want to make sure I stockpile some cash to be ready.

Tertiary Goal: Emergency Fund

My last few posts in this series have had my emergency fund as my least priority. I will repeat, as I have been, I do not see a need for me to prioritize an emergency fund in my current situation. If you want more information on why this is the case, head on over to my post on emergency funds.

Ups and Downs

Ups

This month had lots of “ups”. My parents came to visit from Rhode Island, my wife and I got to spend lots of quality time together, and my net worth went up a lot! Despite getting a bonus, I was also able to not spend more money. I think this is extremely important. I believe the term for this is “lifestyle inflation”. To be honest, I couldn’t have asked for a better month.

Downs

A lot of my “spending money” was spent on fast food. For more context on what I mean by “spending money”, head on over to this post. The TL;DR of the post is the following: my wife and I have separate checking accounts that hold a very small portion of money. We designate this as “spending money”, which we essentially have the right to blow on whatever we want. Every month, these accounts get replenished. Continuing on….

The reason I consider the above to be a “down” is more of a psychological reason. Yes, this very small amount of money can be used anywhere for any reason. What do I have to show for it, though? A larger waistline? Going into next month, my plan is to spend that money on things I truly enjoy.

Financial Picture

To recap the ups and downs section with actual numbers, here is how my financial picture changed from August 1 to August 31. Keep in mind that these numbers are tracking changes, not the current values.

Net Worth: Increased by $5,500

Assets: Increased by ~$1,500

Debt: Decreased by ~$4,000

Looking Forward

August was a really great month. We were extra frugal, exercised some ISOs, and got my bonus. We did all of this while also expanding my waistline! The major plan for next September is to try to cut costs even more. My wife and I noticed that we are nowhere near optimized on our grocery bill. We both agreed we can do a lot better. Our biggest goal for next month is to only shop grocery sales and to clip coupons. Let’s see how that works.

Conclusion

I hope you are enjoying these posts. Again, I am not trying to brag or show off. The goal with this series is to give you more of the emotional side of my journey to financial independence. The point is to show you that while it may be simple, it is not easy. Let me know in the comments if you are finding this series helpful, and any similarities/differences you are encountering on your journey!

]]>https://www.thefiguys.com/coreys-financial-independence-update-august-2018/feed/0646How Moving to Another Country Changed Got Me on the Path to FIhttps://www.thefiguys.com/how-moving-to-another-country-changed-got-me-on-the-path-to-fi/
https://www.thefiguys.com/how-moving-to-another-country-changed-got-me-on-the-path-to-fi/#respondMon, 27 Aug 2018 18:19:18 +0000https://www.thefiguys.com/?p=628I’ve been thinking about how I got into Financial Independence and why I decided to pursue it. I think part of it was actually moving…

]]>I’ve been thinking about how I got into Financial Independence and why I decided to pursue it. I think part of it was actually moving to London for a short time. Why was that? Well I wanted to write about that how I became more into FI.

Less Stuff

When I moved, I didn’t bring a lot of things I had accumulated like my books, my electronics, and a few other things I couldn’t take across the ocean. By doing this, I realized I didn’t need nearly as many of the things I had accumulated over the years to live a good life. Granted I did miss a few things I grown accustomed to, but I also learned ways I could get around it.

Started Watching Less TV

Britain requires a TV license to watch live TV, which is essentially a tax I didn’t want to pay. So no TV meant, I had to rely on other things for entertainment. Good thing was London has a bunch of free things to check out like museums, but also there’s plenty of good stuff on podcasts, YouTube, and the Library. Not having a TV meant I ended up reading more as well, and some how I stumbled onto FI with the reading.

Relearning Old Tricks

My parents had been big on teaching me all sorts of things about frugality like air drying my clothes and picking up used items. Somehow I had forgotten about doing things like that, probably due to the inconvenience at times. Stores were easier to get to in the States with my car and the dryers ran better in the states. However, living in Europe without those luxuries forced me to relearn how to appreciate what my parents did before. I may do a blog post on my parents lessons in the future (and what I had to unlearn from them as well).

The Urge to Meet Folks

Not knowing anyone made me want to find community. So then I joined some Financial Independence groups on Facebook. Not only that, but talking more about FI made me want to share it more and more about it with people.

What made you guys want to pursue FI? Did a move or a life change alter your outlook on money? Let us know in the comments below.

]]>https://www.thefiguys.com/how-moving-to-another-country-changed-got-me-on-the-path-to-fi/feed/0628Emergency Fund: What It Is and What It Isn’thttps://www.thefiguys.com/emergency-fund-what-it-is-and-what-it-isnt/
https://www.thefiguys.com/emergency-fund-what-it-is-and-what-it-isnt/#respondFri, 24 Aug 2018 04:00:11 +0000https://www.thefiguys.com/?p=611We see the word “emergency fund” thrown around in personal finance. Professionals usually disagree on their use and how much money we should have in…

]]>We see the word “emergency fund” thrown around in personal finance. Professionals usually disagree on their use and how much money we should have in one. A lot of people also disagree on where to store it (hint: not under your mattress). In this post, I am going to try to address these questions from the perspective of financial independence. Specifically, I am going to address the following questions:

What is an emergency fund?

What isn’t an emergency fund?

How much money should you have in it?

Where to keep your emergency fund?

Before diving in, I want you to understand something important. This is an opinion post. Ultimately, your definition of “emergency” will differ from mine. I follow a very strict set of guidelines for my emergency fund, but it doesn’t mean you have to. With that, let’s dive in!

Emergency Fund Basics

What is an emergency fund?

According to Investopedia, an emergency fund is defined as the following:

An emergency fund is an account for funds set aside in case of the event of a personal financial dilemma, such as the loss of a job, a debilitating illness or a major repair to your home. The purpose of the fund is to improve financial security by creating a safety net of funds that can be used to meet emergency expenses as well as reduce the need to draw from high interest debt options, such as credit cards or unsecured loans.

This is the definition that I agree with most – it does have some flaws, however. To me, its primary purpose is to cover your most basic needs in the event of a job loss. Your most basic expenses include things like mortgage/rent, medical expenses, utilities, food, and monthly bills that you must meet in order to avoid penalties.

A secondary purpose of the emergency fund is to fund major unforeseen expenses. Unforeseen medical expenses usually fall into this category. Some examples are broken/fractured bones due to injury, newly diagnosed illnesses, or other similar things. In my opinion, a hit to your health is always considered an emergency.

What isn’t an emergency fund?

There is a good rule of thumb to follow when deciding whether or not to use your emergency fund for an expense. Always ask yourself the question, “is this an emergency, or not?” before using it. Using the definition provided above, let’s look at common events that might prompt you to use this fund when you shouldn’t.

A lot of people use their emergency fund as a down payment on a house. I am a firmly against this practice. In doing this, you are setting yourself to not be able to handle true emergencies. What happens if you lose your job a month into your new house? What happens if you become injured? In these scenarios, you are required to use credit cards or other forms of debt.

Buying or repairing your car is usually not considered an emergency. This might sound a bit harsh, but these are things that you should budget for. The cost of owning a car includes maintenance and repairs. Very few cases call for using your emergency fund. It might be silly to blanket statement this, though. My advice is to just your sound judgement in this scenario.

In general, emergency funds are not a typical savings account. You should not use them to make purchases that you can properly save for.

How much money to keep in emergency fund?

Unfortunately, this is one of the areas that is least clear. I hear different numbers get thrown around all the time. It is very common for people to generalize the answer across the board. A rule of thumb often heard is 3-6 months of expenses. Some even say 6-12 months.

The truth here is that this amount varies from situation to situation. Some situations only call for 3 months, while others call for a full 12 months. When it comes down to it, there are some factors that help determine how much money to keep in an emergency fund.

Employability

Don’t forget the primary use case of emergency funds. With that, you need to consider how employable you are when determining how much money to keep in your emergency fund. Are your skills highly employable? Is the job market in your area hot? If so, you can most likely err towards a 3-6 month emergency fund.

Age

This is a tough one. Basically, the younger you are, the less prone you are to major medical expenses. This does not mean that you are in the clear, though. The older you get, the better prepared you should be for a medical emergency.

Family Size

If you are a single woman or man, then you only have to worry about your particular emergencies. The larger your family grows, the less risk you might be willing to take on. As you add kids to the picture, you will want to move from the 3-6 month range to the 6-12 month range.

Examples

Let me provide two examples of how this looks in practice.

Currently, I am married and in my early-mid 20’s. My wife is in her early 20’s. We have no kids, are relatively healthy, and are very employable. I have a computer science degree and she has a business degree. Her salary alone could cover our most basic needs. My salary alone can allow us to live a good life. With that, we decided that we want no more than 3 months of expenses in our emergency fund.

John and Jane Doe are married and in their mid 40’s. They are married, have 2 kids, a mortgage, and are also relatively healthy. Jane has a highly employable set of skills with a masters degree. She knows she could get hired anywhere in her market. John, unfortunately, does not have as employable set of skills. It would take him a 2-3 months to secure another job if he lost his. Jane’s salary is not enough to cover the family’s basic needs. John’s salary is not enough to cover basic needs. Lastly, Jane and John have no debt.

Given all of the above, it makes more sense for Jane and John to have 9-12 months of expenses in an emergency fund. If they did not have kids, they could probably get by with 6 months. If either salary was enough to sustain basic needs alone, they could get by with 6 months.

As you can see, this clearly more of an art than a science. You need to understand your situation before determining how much to have in your emergency fund.

Where to keep your emergency fund?

There is much debate about where to keep an emergency fund. Some people believe in investing it, while others would rather store the cash under their mattress. Below, I’ll outline some options for you.

High Interest Savings Account

This is where I keep mine. Interest are on the rise, so this option is looking better and better. Here, you can find some of the best online savings accounts. I use Ally, and have been very satisfied with them.

CDs

If you want additional yield with less liquidity, a CD could be for you. While I would not store my entire emergency fund in a CD, it can make sense for someone to store a portion there. Online banks, local banks, and credit unions all should have this option. Make sure you understand your liquidity options and any early access fees you might be liable to pay.

Treasury Bills

I am getting a bit fancy here. I personally wouldn’t store my emergency fund in treasury bills. However, I figured some might have an interest in it. Treasury bills are commonly used for larger sums of money. To learn more about treasury bills, visit the official treasury direct website. Some brokers also allow the purchase of treasury bills – Vanguard currently does this.

Roth IRA Index Funds/Stocks/Bonds

I actually like this option. This is considered liquid since Roth IRAs allow you to withdraw all contributions after 5 years of opening the account. If you are willing to subject yourself to short term market swings, then this option is fine. This option also works for those who keep 12 month emergency funds.

Under Your Mattress

Please don’t do this, actually. Inflation will destroy the value of your money this way. If FDIC fails you and the market goes to zero, your paper money will probably have no value.

Many other viable options also exist here. I mainly highlighted the options that I understand best. Additionally, I urge you to do some research into what your best option is for your emergency fund.

Conclusion

I hope you have a better understanding of emergency funds. If you do not have an emergency fund, I recommend starting a small one. It is extremely important to be prepared for the unexpected. Let me know if this was helpful for you in the comment section below!

]]>A pillar of FI is lowering your grocery bill and lowering your eating expenses. Today, I wanted to spotlight some fast food favorites and show how you can make them at home, with directions from the head chefs at these eateries themselves. Now I know there are a lot of copycat recipes online, but to be as authentic as possible, I wanted to spotlight recipes made by folks working at these restaurants themselves. With that, let’s take a look at some of these.

McDonald’s Big Mac

The Big Mac is the signature hamburger of McDonald’s. Dan Coudreaut, the former head chef at McDonald’s, shows you the basics of making a Big Mac burger. He even shows you a recipe for the special sauce using ingredients you can buy at the grocery store.

McDonald’s Egg Mcmuffin

If you are a fan of a McDonald’s breakfast, try out this recipe. David Peterson, a McDonalds franchise owner in Santa Barbara, California and son of Herb Peterson (the credited inventor of the Egg Mcmuffin) shows off the making of his father’s signature Egg Mcmuffin with one of the chefs at one of his McDonald’s resturants.

(Dan Coudreaut also did a video on the Egg Mcmuffin a while back, but that seemed to have disappeared from Youtube due to McDonald’s and the Olympics ending their olympic partnership.)

Shake Shack Shackburger

For something a bit more gourmet, you can also try making the Shackburger from Shake Shack (and definitely skip the long lines waiting for a burger from them).

Shake Shack Fries and Shakes

If you want to make your meal complete, chef Mark also shows off Shake Shack’s recipe for cheese fries and milkshakes.

Eggslut’s Fairfax Sandwich

Eggslut is a regional restaurant located in Los Angeles and Las Vegas. They are also known for their long lines for their terrific breakfast sandwiches. In this video, chef Alvin Cailan shows you how to make their most popular sandwich, the Fairfax, at home.

]]>https://www.thefiguys.com/how-to-make-fast-food-at-home-from-the-chefs-themselves/feed/0371My Top 4 Financial Independence Bookshttps://www.thefiguys.com/top-4-financial-independence-books/
https://www.thefiguys.com/top-4-financial-independence-books/#respondFri, 17 Aug 2018 13:31:44 +0000https://www.thefiguys.com/?p=591A common thread in the financial independence community is reading books. It is one of the best ways to learn, relax, and grow. Some of…

]]>A common thread in the financial independence community is reading books. It is one of the best ways to learn, relax, and grow. Some of the most successful people in the world are voracious readers, and even say that reading everyday is key to success.

So, where should you start? I believe that there are 4 books that everybody should start with on their path to financial independence. Don’t get me wrong – these 4 books are not the “best” books, nor are they the only books you should be reading. I simply believe that these 4 books are a great starting point to achieving financial independence. Without further ado, let’s get to reading!

DISCLAIMER: The post will contain affiliate links that gives The FI Guys commission.

1. The Richest Man in Babylon – George Samuel Clason

The Richest Man in Babylon is my favorite of the 4 books listed in this post. It introduces an extremely important concept that financial independence seekers swear by: pay yourself first. What is “paying yourself first” exactly? Let me explain below.

Everyone has bills to pay – rent/mortgage, utilities, cell phone, etc. The “pay yourself first” concept considers yourself to be a bill that you need to pay. Not only do you need to pay this bill, but you need to do so first! By doing this, you are ensuring that you are saving more than you are spending – a fundamental financial independence concept.

How does this look in the real world? I’ll give you two examples.

Your net pay is $3,000 per month. You decide to pay yourself (the book recommends 10% to start) $300 before paying any other bill. This means that you have $2,700 to pay your remaining bills.

A better example is a 401k. You contribute 10% to your company sponsored 401k every pay period. You have successfully paid yourself first!

This book does a fantastic job of introducing this concept through humorous stories. I consider it to be a starting point to financial independence for the following reasons:

You will want to pay yourself more than 10%. The 10% figure is the absolute minimum here.

The book does not discuss taxes – specifically tax advantaged retirement accounts. This is good for a complete beginner that does not want to be bogged down by details and complexities.

The book does not discuss index funds. Index funds are an important concept in financial independence and investing in general.

I will admit, this book is a bit elementary. However, it served as my first introduction to financial independence. This book illustrates a timeless concept in an easy to read, and quite funny, format. Whether you are new to financial independence or a seasoned veteran, I suggest picking up this quick read.

2. The Millionaire Next Door – Thomas J. Stanley

The Millionaire Next Door comes in at number 2 on my list. In short, the author studied and interviewed a large number of millionaires. He observed their buying and saving patterns, along with other lifestyle observations, in order to draw some conclusions on how to “truly” become a millionaire. This book has received a lot of flack and is the center of some controversy. Some people debate the actual facts and figures, while others claim that this book is outdated.

Nonetheless, it was a great read. It opened my eyes to the fact that it is usually difficult to determine who is a millionaire. People normally associate millionaires with a luxurious lifestyle. According to this book, this is just untrue. Most millionaires live in your middle class neighborhoods, drive used cars, and dress frugally. This book made me realize that a very common (and effective) way to wealth is through avoiding “keeping up with the Joneses”.

Despite the fact that this book is number 2 on my list, there are some drawbacks to it. A major drawback of this book is its lack of actionable advice. The Millionaire Next Door is primarily an observational book. It will not tell you how to invest. It will also not tell you ways to save money. One should take this book with a grain of salt and take time to do your own homework to either verify or dispute the facts.

Regardless, I do recommend this book to everybody. Even if the facts are a little off or outdated, it will provide you with some insights as to what it means to be a millionaire.

3. Set For Life – Scott Trench

Set For Lifecomes in at number 3 on my list, and is the complete opposite of The Millionaire Next Door. The first two books offer up insights and change your thought process on personal finance. This book will now put all of those observations and stories into action.

As stated above, this book gives sound, actionable advice on multiple fronts. It teaches you, from step 0, how to become “set for life” (aka financially independent). It does so by attacking the following: frugality, income, and investing. Here are some snippets from my personal notes that I took on this book a while back. I am going to copy and paste them right into this post as block quotes.

Frugality

Largest expenses should be cut. This includes housing, transportation, and food expense. Live with a roommate, “house hack”, move closer to work, bike to work, meal plan.

Do not cut expenses related to happiness. Dinner with family, buying coffee every morning, etc…

Frugality can leave you open to explore new opportunities. It can enable you to take a pay cut for higher upside work (think sales, or working at a startup).

Biggest takeaway is to spend on what you truly enjoy! It is acceptable to buy a coffee everyday, or spend on family activities. Cut the largest expenses from your life using the “hacks” defined above.

Income

Because of frugality and a long financial runway, one is more flexible when seeking higher income opportunities.

Investing

Index investing is extremely passive and is acceptable for those not seeking aggressive returns and early FI.

Leveraged real estate outperforms the stock market. As leverage position decreases, so do returns relative to stock market.

NEVER spend your principal. Once money goes invested, it is never to be “spent” again. Think of it as gone.

Final Notes

I seriously recommend this book to everyone. It introduces some awesome insights and actionable steps to pursuing wealth. As a followup to this book, author Scott Trench also published this post called 10 Seemingly Harmless Habits That Sabotage Ambitious Millennials. This article is a watered down version of some bad habits he outlined in the book.

Lastly, I want to leave you two of the biggest takeaways I had in my personal notes on this book: hedonic happiness, and return on enjoyment.

Hedonic happiness – the concept that there will almost always be a mean reversion to a set level of happiness. That new BMW will make you happier for about a month, and then you will return the same happiness level you had before buying it.

If something “A” is 10x nicer and more expensive than something “B”, it does not mean that you will enjoy it 10x more. Using the above example, a $100,000 car does not produce a 10x better driving experience than a $10,000 car.

4. Rich Dad Poor Dad – Robert Kiyosaki

Rich Dad Poor Dad is the most recommended book on real estate investing. This book is mainly about passive income, as told through the lens of a young boy with a “rich dad” and a “poor dad”. The young boy, presumably Robert Kiyosaki, teaches the reader lessons that he learned from both dads. Essentially, he teaches the reader how to be poor and how to be rich.

It is typical in the financial independence community to invest largely in index funds. Being an aspiring real estate investor, and wanting to achieve solid cash flow through rental properties, I found it suitable to include this book in my list. I want to make sure that I advocate for alternate investments, like real estate, and not just index funds. There is nothing wrong with index fund investing – I actually find it to be the most stable and passive way of investing.

For those of you that do not care to take an active part in your investment decisions, then index fund investing is for you. For those of you that want more control over your returns, I suggest picking up a copy of Rich Dad Poor Dad. As stated above, it is a great introduction into the world of real estate investing.

Key takeaway from this book is to consider alternative approaches to financial independence. There is no “one size fits all” in this space. Index fund investing, real estate, private equity, and starting a business are some ways to achieve FI. Do not limit yourself to just one if you don’t want to.

Conclusion

I really hope that you enjoyed reading about my top 4 books. Again, these are not the only books that I read. They are also not the only books you should be reading. Part of achieving financial independence is to take an active role in your continuing education. Pick up these books and get to learning!

In the beginning of this post, I mentioned that there will be affiliate links to the books mentioned. For those of you that are more frugal minded, get these books from your local library. Also, don’t forget to head over to Allen’s post Making Better Use of Your Library Card with Free Apps to learn how else you can use your library card to continue your education.

This sounds pretty awesome but I’m guessing this only applies to US residents and not European?

The answer is yes, though with some caveats:

Two of the major flexible rewards providers, Chase and Citi, do not offer credit cards outside the US.

The sign-up bonuses are not nearly as good as the American cards.

However, it’s totally possible to travel hack a free trip with cards. I thought I’d take the opportunity to demonstrate one with the same tools I used before in my previous post, though with different cards. This time, we’ll take a trip from London, England to Prague, Czech Republic.

Flights

Award Hacker flights to Prague from London

We can use Awardhacker and see how many miles we’ll need. For short distance trips in Europe, an airline that uses Avios like British Airways will generally always be the best option for your points. You can read more about it here (for fun also check out the Avios calculator to see how much it costs to fly to other destinations). As you can see, it’ll cost about 9000 points for a round trip off peak (in other words, not the busy season).

Credit Cards

American Express is really your best option for travel rewards in the UK. Two cards to use would be British Airways card and the Starwood Preferred Guest card there. Note, however, you are better off not signing up with the links on the American Express site itself, but rather with a referral link as those will give you a better bonus along with the person who referred you. I’d recommend asking on Head for Points for a referral link if you don’t know anyone who has these cards.

Conclusion

If you want to read more about collecting points in the UK, check out Head for Points, the premier travel hacking blog for the UK.

]]>Welcome to another post in my Financial Independence Update series! If you don’t know what the purpose of this series is, please read this first. This month, I am covering July of 2018.

I want to follow this particular format in these posts:

Main Goal(s). This will talk about my main financial goal(s) that I set out for the particular time period.

Ups and Downs. This will be a general reflection of what went well, what did not go well, and some improvements I am looking to make.

Financial Picture. This is not a net worth update. In this section, I will talk about how I deployed my cash in a way that improved my financial situation and why I did it the way that I did.

LookingForward. In this last section, I will talk about what I plan on doing going forward. This can include how I plan on deploying cash, any changes in my strategy, or any significant expected changes in my financial situation in general.

Before diving in, I just want to give you a heads up on what you are going to read. This month, the main focus was experiencing life a bit more than usual. My wife and I had some profound conversations about money and life, which was reflected in July’s overall spending. I’ll explain more below!

Main Goal(s)

Primary Goal: Live More

The primary goal was this month was to live more. What do I mean by this? In late June, we determined that our budgets did not reflect how we wanted to live our lives. We had too many categories and felt like we were too constrained. With that, we refined our “experience life” budget, and cut out a few others. How exactly did we achieve this “live more” goal?

We seriously evaluated what we derive pleasure from and what we could do without. One of the biggest changes we made was regarding going out to eat. We typically considered going out to eat an “experience life” expense.

We still go out to eat, but do so less frequently. The memories gained from “living more” far outweigh the short term pleasure that good food brings. Therefore, we prioritized “living more”.

We upped the “experience life” budget a little bit to allow room for more flexibility.

We actually experienced life more!

Secondary Goal: Student Loan Paydown

If you recall the last post in this series, I mentioned how ferociously we attacked debt this year. Well, we are continuing to do so. It is not the most efficient way to deploy our money, but we want the peace of mind of having no debt. Not much more to go here!

Tertiary Goal: Emergency Fund

The last post in this series also mentioned the fact that we drained ourselves of all cash. I was not kidding. The reason this is a tertiary goal, and not a secondary or main goal, is simple. Both my wife and I have highly employable skills and are able to live off of one income. The likelihood that we both would lose our jobs at the exact same time is extremely unlikely. That being said, this is a very short term risk that we are taking. We expect to be out of this situation soon.

Ups and Downs

July had plenty of ups and downs. The ups and downs were mostly psychological, not financial. However, financial independence (hell, even personal finance in general) is mostly psychological. Just because I am working to achieve financial independence and happen to be good at personal finance, does not make it psychologically and emotionally easy.

Ups

My wife and I at the Ohio State Fair.

We spent less money than budgeted and still had a fun, fulfilling month. Also, we spent about half as much money on eating out, which allowed us to focus on experiences, or “living more”. We went to the Ohio State Fair, spent a bit more time outdoors, and found an awesome video rental store on the cheap.

In lieu of going out to eat more, we decided to start getting creative in the kitchen. A lot of our eating out money was spent on Mexican food, so the easy decision was to start cooking more Mexican food at home. With that, Taco Tuesday was born! Every Tuesday, we are going to cook a different style taco. Maybe I’ll even write about some recipes.

Lastly, this month was the first month we felt like we nailed our budget – it only took 2 years! What do I mean by this? We reworked our budgets to fit our lifestyle with looser categories. We now use Mint as more of a tracking system than a budgeting system. This is not to say that we don’t set specific limits – we still do. The difference is that we allow for more flexibility in our lives without increasing our expenses by much.

Downs

By reworking our budgets, we are spending a bit more money per month. I consider this a “down” because it does slow progress towards financial independence. However, should I truly call this a “down”? The point of financial independence is not the money. Yes we are on our way to becoming wealthy, but what does that matter if we are not enjoying the journey? This is a realization that I had in July, and it’s why I am including it here. A lot of tough conversations were had this month that ultimately led to this.

I really want the above paragraph to resonate with you. While we do talk a lot about money on The FI Guys, it is truly not the end goal. This is not a “get rich” blog, and we actually do not care about money per se. Again, our purpose is to share our journey with you to help you.

Financial Picture

To recap the ups and downs section with actual numbers, here is how my financial picture changed from July 1 to July 31. Keep in mind that these numbers are tracking changes, not the current values.

Net Worth: Increased by $3,800

Assets: Decreased by $650 (deployed even more of our cash to pay down debt than originally expected)

Debt: Decreased by $4,450

Looking Forward

July was a really great month. We stuck to our spending limits, continued to increase our net worth, and had a blast doing it. The realization that financial independence is more about living life than it is about the money was a very freeing feeling.

Looking to August, I suspect a similar update. One thing to keep in mind financially for August is employee stock options. I need to determine whether or not to execute and sell more of my options and then what to do with the money. The good news is that I have no idea what to do, so you will have to wait until the August update to find out!

Conclusion

I hope you are enjoying these posts. Again, I am not trying to brag or show off. The goal with this series is to give you more of the emotional side of my journey to financial independence. The point is to show you that while it may be simple, it is not easy. Let me know in the comments if you are finding this series helpful, and any similarities/differences you are encountering on your journey!

]]>https://www.thefiguys.com/coreys-financial-independence-update-july-2018/feed/0549Taxes and Investing as an American in the UKhttps://www.thefiguys.com/taxes-and-investing-as-an-american-in-the-uk/
https://www.thefiguys.com/taxes-and-investing-as-an-american-in-the-uk/#commentsSun, 05 Aug 2018 16:25:34 +0000https://thefiguys.com/?p=173As I mention in my last post, I currently live in London, England. However, as an American citizen living abroad, reaching financial independence becomes more…

]]>As I mention in my last post, I currently live in London, England. However, as an American citizen living abroad, reaching financial independence becomes more difficult as I describe below. So what does that mean for folks who want to be financially independent? I’m going to run down the steps I’ve gathered from information sources around the net and speaking to several advisors. Hopefully this helps you with your investments like it did for me.

(Disclaimer: Please note the standard disclaimer here applies. I am presenting my own experiences that have been presented to me by others who have researched this topic. I have done my best to distill it down as a simple action plan. However, as I illustrate below, there are a surprisingly large amount of people willing to trade their time to help you. Please do consult a professional with your situation.)

The Main Problem – Taxes

If you could boil it down to one problem, though, it would have to be taxes. Unlike most countries in the world besides Eritrea, the United States government taxes its citizens and residency card holders even when they are not living in the US. So Americans working and living abroad have to worry about taxes in two different tax jurisdictions. One break you do get from the US government though is the foreign earned income exclusion, meaning you won’t be taxed on any of your income if you make less than $103,900 in 2018, but you’ll still have to file taxes every year.

Because of the tax reporting requirements of American citizens living abroad, most investment companies (even American ones like Vanguard) don’t want to deal with Americans living abroad. They won’t just shut down your accounts of course, so if you’ve been investing you will be ok. But for the beginners, without a US address (or for those of you who attempt to have your mail sent to your new address), you won’t be able to open a new account.

There are also all sorts of tax rules involving investing in index funds in other countries. Those tax rules can negate the gains greatly. I don’t want to go into it here, because I don’t really understand it well, but look up Passive Foreign Investment Company or PFIC when you get the chance. Please note this doesn’t apply to individual stocks though, but we all know how hard it is to pick individual stock

The FI community starts with a do it yourself attitude, and while admirable, this is probably not the place for it (at least not at first). Your UK taxes will be easy as the government does your taxes for you. However, you are going to want help filing your tax returns in the US from one of the US expat tax firms out there (there are a few of them out there).

Update: I found a pretty good guide on taxes for US citizens living in the UK.

Investing

Retirement accounts

From what I’ve seen, retirement accounts around the world tend to be pretty similar. Generally, they all work on the same basic principles. You take a portion of your earnings and then pay them into an account where it can grow and remain untouched until you stop working. There can be, however, differences for what they are called in various countries, their tax treatment, etc. Because of these differences, the IRS doesn’t know how to treat all of these different types of retirement accounts around the world unless spelled out in a tax treaty.

Maximize your pension contributions

Unlike many tax treaties the United States has with foreign countries, the U.S.-UK treaty addresses pensions comprehensively, with rules related to contributions, earnings, and distributions. For example, while living in London, an American can deduct, for U.S. tax purposes, contributions to their UK pension plan. This deduction is only available while the U.S. taxpayer resides in the United Kingdom.

So like an American with a 401K/403b at work, you should strive to contribute as much as you can. Like the US workplace retirement plans, the government will provide tax relief on what you contribute. As in the States, your employer will likely also match a small percentage of your contributions. Unlike in the States, savings is mandatory, so you are required to put money into a pension and your employer is required to match, but you control the amounts. For most of us in 2018, it should be £40,000 a year contribution limit. This pension allowance also carries over if unused for 3 years.

Don’t Get an ISA

So the pension takes care of the 401k equivalent, but what about an IRA equivalent? The closest equivalents to an IRA would be the Individual Savings Accounts or ISA. Sadly, the tax treaty does not cover these, so it is best to avoid these. Not only do they not provide the tax protections of IRAs in the US, they also can make it so that you have to register a PFIC. You can read more about this in Why Americans Should Never Own Shares in a Non-US Mutual Fund (PFIC) by Thun. You might as well just use your US investment options if you have them already (Note: there may also be some long term implications of that when living abroad as well. Again consult an advisor).

Other Money You Have

Transfer Money Back to the US

As mentioned before, investment companies do not really take on American expats, with the notable exception of Interactive Brokers. (I’ve never used their service, but the Bogleheads’ wiki has a good breakdown). Because of this, you will likely have to find ways to keep your American investment accounts open and invest with those. There are a few apps that can facilitate transferring money between different currencies, but I like Revolut the best for its simple interface.

General Investment Advice

There are a few US expat financial advising companies out there such as Thun Financial Advisors and Tanager Wealth Management. They will not manage your investments unless your investable assets are over $500000 USD, but they will take phone calls and answer your questions over email for those of you that ask. I’ve emailed them a few times myself about random questions I had about the topics above. Each time, they have responded helpfully to these requests. There are likely a few more expat advisors for Americans as highlighted by Andrew Hallam.

Is there anything else I missed anything else about US expat finances? Any other questions you guys have about it? Let us know in the comments below.

]]>https://www.thefiguys.com/taxes-and-investing-as-an-american-in-the-uk/feed/2173Corey’s Financial Independence Update – 2018 Part 1https://www.thefiguys.com/coreys-financial-independence-update-part-1/
https://www.thefiguys.com/coreys-financial-independence-update-part-1/#commentsFri, 03 Aug 2018 16:01:00 +0000https://www.thefiguys.com/?p=502Welcome to the first post in my Financial Independence Update series! If you don’t know what the purpose of this series is, please read this first.…

]]>Welcome to the first post in my Financial Independence Update series! If you don’t know what the purpose of this series is, please read this first. This being the first post in the series, I will cover the entire first half of 2018, so it might be a longer one. Every post after this will cover one month, with the next post covering July.

I want to follow this particular format in these posts:

Main Goal(s). This will talk about my main financial goal(s) that I set out for the particular time period.

Ups and Downs. This will be a general reflection of what went well, what did not go well, and some improvements I am looking to make.

Financial Picture. This is not a net worth update. In this section, I will talk about how I deployed my cash in a way that improved my financial situation and why I did it the way that I did.

LookingForward. In this last section, I will talk about what I plan on doing going forward. This can include how I plan on deploying cash, any changes in my strategy, or any significant expected changes in my financial situation in general.

Main Goal(s)

Primary Goal: Cash For Investments

Before the start of 2018, my wife and I sat down together to discuss our financial picture and goals for 2018. Having just paid for our entire wedding in cash, it was clear what our main goal should be: build up a significant cash portfolio. The purpose of this cash would be to purchase real estate in the Columbus, OH area. I am a firm believer in the power of rental property as a means to financial independence.

Secondary Goal: Tax Advantaged Retirement Accounts

The goal was to max out retirement accounts to reap the tax benefits. Currently, my wife and I each have a 401(k) through our respective employers. We also opened up Traditional IRAs and planned to max those out.

Tertiary Goal: Debt Reduction

The only debts that we carried at the start of 2018 were two low interest auto loans (2.99% and 3.69% interest via Lightstream) and student loans (all below 5% interest). We figured that making the minimum payments made the most sense since we could earn higher returns by investing in rentals.

Ups and Downs

The first half of this year had plenty of ups and downs. While progress towards financial independence exceeded my expectations, I found myself reversing the order of my goals.

A couple of months ago, I started to become fearful of my local real estate market. Houses were staying on the market for a bit longer than usual, price reductions were a bit more common, and interest rates were on the rise. I felt like the local housing market was approaching a peak and was hesitant to enter.

Ups

I was holding onto the most cash I have ever had. My strict budgets were being stuck to, and I achieved a savings rate of over 50%. Over the course of 6 months, this caused my net worth to increase by around $45,000. This increase is largely due to my savings rate.

The first half of the year also saw significant debt pay-down. Within the first 6 months, $42,000 of debt was eliminated. Additionally, all auto loans were paid off in these first 6 months. The only debt I hold onto now are student loans.

In terms of investing, I was contributing to my 401(k) and maxing my employer’s stock purchase plan (ESPP).

Downs

Towards the beginning of June, my wife and I decided to become more risk averse. Given the changes in the local real estate market, we decided to take the stockpile of cash we accumulated and pay down debt. With that, we left ourselves with a dismal cash position. In additional, we decided that we want to prioritize debt pay-down over investing.

I would usually not consider paying down debt to be a “negative” on the road to financial independence. The reasons I consider it to be a negative here is are following:

Low interest rates. With the auto loans having low interest rates, this money should have been invested. Mathematically, this move did not make sense – it was a psychological move.

Not enough cash. Using almost all of our cash on hand to pay down our debts, we left ourselves with almost no cash. I am not too concerned with this since we have a high savings rate.

Not maxing out tax advantaged accounts. Again, mathematically this does not make sense. This was a psychological move that was intentionally made to accelerate debt pay-down.

All in all, this first half exceeded expectations. The positives far outweighed the negatives.

Financial Picture

To recap the ups and downs section with actual numbers, here is how my financial picture changed from January 1 to June 30 of this year. Keep in mind that these numbers are tracking changes, not the current values.

Net Worth: Increased by $45,622

Assets: Increased by $2,697

Debt: Decreased by $42,925

Looking Forward

The first half of this year has been a financial blessing. Hard work and discipline has significantly improved my financial picture and brought me one step closer to financial independence. Although, what good is reflection without analysis and improvements?

Looking forward, we are going to continue to make debt pay-down a priority. We are willing to sacrifice higher returns for peace of mind. In July, we are planning on making another significant payment on student loan debt. From there, we will enroll in auto pay and use the majority of our leftover funds every month to pay down this debt.

In terms of investing, there will be no change. Contributing the minimum to my 401(k) makes financial sense to get the “free money” (employer match). I will also continue investing in my ESPP because the discount is too good to pass up.

Finally, in terms of budgeting, the wife and I have decided to loosen up a bit. We are on the fast track to FI, but feel like we could spend a bit more money on ourselves. Stay tuned for the July update to see just how these budget changes worked out!

Conclusion

I really hope this has given you a bit of a glimpse into my financial independence journey. As stated earlier, I want to use this to show you how I am going about it in real time. Using this, I hope you feel inspired to continue or even begin your own journey. Let me know in the comments!